When first heading into 2025, many market experts bet on equities paving the way for growth strategies through the year. This narrative has not particularly changed, per se. However, the recent spurt of volatility in the large-cap tech sector may make investors second-guess how to build a growth portfolio. Luckily, there’s a fairly simple solution for this quandary. As part of the growth narrative, analysts and experts expected market gains to broaden out beyond the Magnificent Seven and other large-caps. One potentially fortuitous means to do so is through engaging with more midcaps.
In the February edition of The BEAT, the Eaton Vance team highlighted the potential advantages of building up midcaps exposure. Notably, the Eaton Vance outlook examined how and why midcaps could be a beneficiary of broadening markets.
“Core to this view is a global recovery in PMIs. Materials, industrials and even technology are CapEx beneficiaries,” the outlook noted. “We continue to hold a positive view on the mid-cap segment of the market, while maintaining our neutral stance toward large-cap tech.”
Advantages of a Responsible Midcaps ETF
When it comes to midcaps ETFs, the Calvert US Mid-Cap Core Responsible Index ETF (CVMC ) offers an interesting solution. The fund provides access to a portfolio of midcaps equities that have a demonstrated history of responsible business practices.
Besides the shareholder advantages responsible business can offer, CVMC provides exposure to crucial midcaps sectors. While the fund has diversified sector exposure, CVMC holds stronger weight toward industrials and information technology. These are two sectors the Eaton Vance outlook specifically highlighted as beneficial sectors to engage with.
For investors looking to stay engaged with the technology sector, diversified midcaps ETFs may offer a unique solution. Compared to large-caps, midcaps companies were noticeably less exposed to the U.S. tech sell-off.
Additionally, the information technology sector only accounts for about 16% of CVMC’s portfolio, as of December 31, 2024. This exposure lets the fund capitalize on midcaps tech rallies, while leaving the portfolio diversified enough to blunt potential risk.
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